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Our Triple Jobs Problem

by Alejandro Reuss Tuesday, Jan. 28, 2014 at 1:05 PM

First, even as unemployment has inched down, the economy has created barely enough jobs to match population growth. Second, this enormous labor-market “slack” has stifled workers’ bargaining power and kept wages low. Third, policies over 30 years have undermined workers

If you hear somebody talking about the U.S. “jobs problem,” ask them which one they mean. Let’s talk about three: First, even as unemployment has inched down, the economy has created barely enough jobs to match population growth. Second, this enormous labor-market “slack” has stifled workers’ bargaining power and kept wages low. Third, even with a “tighter” labor market, workers would still be in a weak bargaining position due to the policies of the last thirty-some years, which have undermined unions, the welfare state, and labor-market regulation.

First, the Great Recession has left the United States with an enormous jobs hole. The silver lining of declining unemployment—down from 10% to about 7.5% over the last few years—surrounds a gigantic dark cloud: The employment-to-population ratio fell dramatically during the recession and has hardly budged since. That’s because labor-force participation, the percentage of working-age individuals who are employed or looking for work, has plummeted. A stimulus too small to make up for the collapse in private spending and a premature turn toward deficit reduction have helped keep us in this jobs hole.

Next, high unemployment makes it hard for workers to bargain higher wages or better working conditions. Recoveries and booms bring lower unemployment and “tighter” labor markets, which increase workers’ bargaining power and should make it easier for them to demand (and win) improvements in pay and conditions. This effect typically kicks in, however, only when the unemployment rate gets quite low—below 5%—and the lethargic employment growth during the last four years means we’re a long way from there. With economic growth resuming but wages stagnant, corporate profits now account for a near-record percentage of total income. This helps explain why corporations have been content with policies allowing the crisis to drag on through years of lethargic “recovery.”

Finally, the lack of high-quality jobs is no mere cyclical problem. It has been a central problem for three decades. Mainstream economists tend to emphasize the ostensibly inexorable forces of globalization and technological change, insinuating that the lack of good jobs is an unavoidable fact of life.

As economist Dean Baker of the Center for Economic and Policy Research (CEPR) notes, however, there’s not much evidence that technological change is faster now than in earlier eras, nor particularly damaging to ordinary workers (as opposed to technical, professional, or managerial employees). Meanwhile, the current form of economic globalization is not some inevitable course of nature, but a result of the distribution of political power in our society. Elites designed laws and treaties to make capital more mobile across international borders—that is, to make it easier for companies to move (or threaten to move) operations to places where wages are lower and regulations weaker.

The current form of globalization, in turn, is only one of several changes undermining workers’ bargaining power—along with government and employer attacks on labor unions, the weakening of the welfare state, and the rollback of labor regulations. These factors are missing from the mantra that workers should just resign themselves to the new reality, that the “good jobs” are gone and never coming back. But they’re also missing from some well-meaning suggestions for getting those jobs back—whether a more favorable exchange rate, increased education and skills, or industrial policies to create new “blue collar” or “green collar” employment.

Whether a job is good or bad is not, for the most part, an inherent fact of the kind of work done. Manufacturing jobs became “good jobs”—in particular times and places—due to unionization, full-employment policies, labor-market regulations, etc. So-called good jobs in transportation and construction have not “gone” anywhere, but job quality in those sectors has declined due to deunionization, deregulation, and employers’ increasing use of contingent labor.

Meanwhile, so-called bad jobs in hospitality, maintenance, and other service occupations are not uniformly bad. As Paul Osterman and Beth Shulman note in Good Jobs America (2011), food-service workers in Las Vegas, where unions are relatively strong, make about more per hour than in largely non-union Orlando. Hotel room cleaners in Vegas, meanwhile, make about more per hour than in Orlando.

There is nothing that makes food service an intrinsically bad job, any more than something makes factory work or trucking intrinsically good.

The fault, in other words, lies not in our jobs, but in our politics.

Alejandro Reuss is a co-editor of Dollars and Sense. This article is from the September/October 2013 issue.

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